[Good Morning Market] Will KOSPI Overcome Semiconductor Alienation? Focus on US Inflation and Tech Earnings

With the U.S. stock market rising on the back of eased concerns over interest rate hikes due to slowing employment growth and strong performances by artificial intelligence (AI) and technology stocks, the domestic stock market is also expected to seek a rebound. However, as leading semiconductor stocks such as Samsung Electronics and SK hynix have recently underperformed in the Korean market, the recovery of investor sentiment in these companies is likely to determine the direction of the KOSPI this week.

On August 7, the Dow Jones Industrial Average rose by 0.3%, the S&P 500 gained 0.6%, and the Nasdaq climbed 1.3%. The Philadelphia Semiconductor Index increased by 2.6%. In particular, the U.S. July employment data helped to calm fears of interest rate hikes by the Federal Reserve, acting as a positive factor for the markets.

New jobs in July decreased by 23,000, falling well short of the market expectation of 85,000 additional jobs. As a result, the market's outlook for the Federal Open Market Committee (FOMC) meeting in September shifted. The probability of a rate hold reached 55.6%, surpassing the rate hike probability of 44.4% for the first time in a month. A stronger outlook for rate stability could reduce the equity discount rate burden through lower yields on 10-year U.S. Treasury bonds, while also alleviating big tech companies' funding burdens for AI investments.

This week, earnings results from major global companies, which will be key to gauging sentiment on semiconductor investments, are scheduled. Starting with TSMC's July sales, companies such as Cisco, CoreWeave, and Applied Materials (AMAT) will announce their results. For TSMC, the main focus is whether third-quarter sales guidance—raised during last quarter's announcement—will be met. If ongoing demand for AI accelerators and advanced process technology is confirmed, market worries over high bandwidth memory (HBM) and server DRAM demand could also ease significantly.

For CoreWeave, the key factor will be how quickly AI infrastructure investments are translating into actual revenue and profitability improvements. For Cisco, investors will be watching to see if the AI investment cycle is expanding from semiconductors to networking equipment, while for AMAT, the focus will be on whether investments in DRAM equipment and demand for advanced packaging for HBM remain robust.

In the domestic market, earnings announcements are scheduled for Mirae Asset Securities, Shinsegae, and other companies in the securities, insurance, and retail sectors. However, it is expected that earnings results from overseas tech firms such as TSMC, Cisco, CoreWeave, and AMAT will have a greater impact on the domestic market than Korean companies’ own results. As foreign investors recently sold approximately 5 trillion won of semiconductor stocks, a positive result from overseas companies could alleviate concerns about AI demand and the memory industry, potentially serving as a catalyst to improve foreign investor flows into the Korean market.

Ultimately, the key issue for the Korean stock market this week is whether the recent 'neglect of leading stocks' phenomenon can be resolved. If funds that had shifted toward growth stocks on the KOSDAQ return to major semiconductor stocks, and if confidence in global demand for AI is restored, the momentum for a KOSPI rebound could become even stronger.

Han Jiyoung, a researcher at Kiwoom Securities, commented, "Although it will be a fatiguing period of having to check and respond to each company’s individual earnings results, recent reports from hyperscalers such as Microsoft and Amazon, as well as semiconductor companies like AMD and SanDisk after late July, have significantly eased concerns about AI demand visibility and profitability."

She added, "The overseas tech stock earnings results scheduled for this week should further relieve worries about a peak-out in AI and memory. The impact of global tech company earnings on the domestic stock market will likely be even greater this quarter than during the first-quarter reporting period, so it is important to take this into account when planning midweek trading strategies."

This content was produced with the assistance of AI translation services.